How One Stupid Mistake And $35,000 From Kickstarter Made An Average Guy Bankrupt

Seth Quest had never founded a company. He was just a designer
with a good idea for an elegant iPad stand called
Hanfree.

He and his business partner, Juan Cespedes, created a Kickstarter page and raised more than
three times their goal: $35,004 from 440 backers.

But since Quest had never manufactured a product before, nor was
he an entrepreneur, he didn't have a working
prototype. He also didn't
set up a business entity, so the liabilities of his "business"
were all on him, and his bank account.

When five months came and went without a shipped product, backers
began to get frustrated. They left more than 600 comments on
Quest's Kickstarter page looking for updates.

For one man named Neil Singh, the experience became too much.
Before backing Quest, Singh had never heard of
Kickstarter. He assumed it was a typical eCommerce site where
products were already made, and shipping would be no issue.

"To me, it looked like a cool thing you could buy,"
Singh tells Inc. "If you give me $70, I'll send you one of
them.' I didn't do any due diligence. I didn't think I had to.
I'm not investing. I'm not doing the same sort of things a
potential shareholder would do. I'm just buying a product."

On November 28, Quest admitted defeat. There were too many
internal conflicts and engineering problems to bring Hanfree to
life. Quest notified all of the backers, Singh included, that
they would not be receiving the iPad stand, and their money would
be returned to them.

Singh wasn't satisfied. He sued Quest and Cespedes, although the
suit against Cespedes was eventually dropped.

"Seth just stalled, and stalled, and stalled," Singh explained to
Inc. "For me, this is why I became a lawyer. I guess I'm more of
an idealist than anything else. It just ticked me off."

The lawsuit made Quest bankrupt. He spent last year in Brooklyn,
dealing with lawsuit-induced anxiety and trying to find part-time
work, which he says was difficult given his tainted reputation
from Hanfree. Now he's in Costa Rica figuring out what to do
next.

"When you fail on Kickstarter,
it's a very public failure," Quest tells Inc. "It definitely
derailed my career substantially. Your backers can give you
massive support, but they can also tear you down if you
fail."

Kickstarter, of course, took no
hit. It's technically not to blame if a product fails to deliver
or if someone isn't qualified to create a product.

For Quest, it was a very tough
lesson to learn. But Singh isn't sympathetic.

"I'm convinced this was more
stupidity than it was fraud," Singh says. "He just didn't think
this through."